Gold prices edged down in early trading on Wednesday, pulling back modestly from recent peaks as investor demand for safe-haven assets weakened following the announcement of a trade agreement between the United States and Japan.
By 05:05 ET (09:05 GMT), spot gold slipped 0.1% to $3,429.01 per ounce, while gold futures also dipped 0.1% to $3,440.60 per ounce.
Trade Pact Reduces Demand for Safety Plays
The precious metal lost some ground after U.S. President Donald Trump confirmed a trade agreement with Japan, easing investor concerns and encouraging a move toward riskier assets. The deal imposes a 15% tariff on Japanese imports—a figure notably less severe than the 25% tariff Trump had previously threatened. Automotive exports from Japan, in particular, saw lighter duties, which contributed to improved sentiment.
Japanese equity markets responded positively, with key indexes rallying to their highest levels in a year. This upswing in risk appetite helped drag down demand for traditional safe-haven assets like gold.
Still, the metal’s decline was contained, as the White House indicated that Trump’s 50% tariffs on steel and aluminum would remain in place.
Political concerns in Japan also tempered some of the optimism. Speculation continues to mount over the future of Prime Minister Shigeru Ishiba, with many analysts predicting his resignation following his party’s significant loss in upper house elections.
Despite Wednesday’s pullback, gold remains firmly in positive territory for the week, holding on to gains of over 2% and hovering just below its record high of $3,500/oz, last reached in April. So far this year, gold prices are up approximately 30%, fueled by global trade tensions, geopolitical instability, and continued buying by central banks.
Other Precious Metals Inch Higher
Silver and platinum have also seen upward momentum this week, both trading between 1% and 3% higher. On Wednesday, the two metals posted modest additional gains, continuing their recent positive trends.
Copper Struggles for Direction Amid Tariff Questions
In the industrial metals segment, London Metal Exchange copper futures slipped 0.1% to $9,911.15 per ton, while COMEX copper futures rose 1% to $5.7768 per pound.
While the U.S.-Japan trade accord marked a step forward in American trade diplomacy, concerns linger over mounting tensions with the European Union. Brussels is reportedly preparing countermeasures after Washington pushed for higher tariff rates than EU negotiators were willing to accept.
Meanwhile, Chinese trade data added further complexity to the copper market outlook. According to ING, Chinese imports of refined copper jumped 15% in June compared to May. At the same time, imports of U.S. copper scrap dropped to their lowest level in 21 years, falling below 2,000 tonnes—a dramatic decline from 14,023 tonnes in May and well under the 2024 monthly average of 36,600 tonnes, based on Chinese customs figures.
This drop comes ahead of a 50% tariff on copper scrap imports from the U.S., which is set to take effect in two weeks. China has traditionally been the primary buyer of U.S. copper scrap, making the trade flow highly significant for both economies.
“Questions remain about the details of the upcoming copper tariffs. There are still no details on whether the duties would apply to all copper products or whether there will be any exemptions. For example, aluminium scrap is excluded from the latest tariffs,” said ING in a recent note.
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